So I got some time to play with that whole boob flattening thing. Yeah you can fix it by changing some variables in the MKMeshClothDescriptor objects like in your tutorial.
Having a low ClothStretchStiffness generally makes them sink into the chest. Though they wiggle around like its DOA set to OMG. So tradeoffs. I found that there were a few ways to stop them from sinking into the chest too heavily while keeping some wiggle by either reducing the Gravity or greatly upping the Thickness (doubling it or more depending on how low the stretch is). I'm happy with my options, preferring them to be perky and pretty much fake looking by choosing defaults in the stretch Stiffness (around .08) and turning off the gravity on them.
Now I'm trying to go through my favorite fatalities to stop the bodies from disappearing. Got Ermac's "head over splatter" after much trial and error.
mega.nz
And I tried to see what you were talking about for Mileena's, but even after disabling all of the flags for hers, the body still disappears. So that's about as far as my knowledge takes me for that one. But what I've seen from the split second before the upper body disappears, modifying the boob physics variables works, but would unfortunately require going into every character file separately. Ugh.
My holy grail now would be finding something that would disable the screen darkening on either the pause menu or the after-fight menu.